Achieve Life Sciences, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Common Stock (Tables)

Common Stock (Tables)

3 Months Ended

Mar. 31, 2015

Stock option transactions and the number of stock options outstanding are summarized below:

	Number of			Weighted
	Optioned			Average
	Common			Exercise
	Shares			Price
Balance, December 31, 2014		1,283,419		$	10.55
Granted		—			—
Expired		—			—
Exercised		—			—
Forfeited		(12,602	)		12.74
Balance, March 31, 2015		1,270,817		$	10.53

Summary of Fair Value of Option Awards

The fair value of each stock award for employees and directors is estimated on the grant date and for consultants at each reporting period, using the Black-Scholes option-pricing model based on the weighted-average assumptions noted in the following table:

	Three Months Ended
	March 31,
	2015		2014
Risk-free interest rates		—		1.82	%
Expected dividend yield		—		0	%
Expected life		—	5.9 years
Expected volatility		—		81	%

Summary of Share-Based Compensation Expense for Stock Options and Restricted Stock

The results for the periods set forth below included share-based compensation expense for stock options and restricted stock units in the following expense categories of the consolidated statements of loss (in thousands):

	Three Months Ended
	March 31,
	2015		2014
Research and development	$	252	$	447
General and administrative		264		553
Total stock-based compensation	$	516	$	1,000

Summary of Restricted Stock Unit Award Activity

The following table summarizes our restricted stock unit award activity during the three months ended March 31, 2015:

				Weighted
	Number			Average
	of			Grant Date
	Shares			Fair Value
Balance, December 31, 2014		680,201		$	7.34
Granted		—			—
Settled		(82,410	)		11.95
Forfeited or expired		(7,255	)		4.99
Balance, March 31, 2015		590,536		$	6.73

Summary of Outstanding Warrants

The following is a summary of outstanding warrants to purchase common stock at March 31, 2015:

	Total
	Outstanding		Exercise
	and		price per
	Exercisable		Share		Expiration Date
(1) Warrants issued in October 2010 financing		1,587,301	$	20.00	October 2015
(2) Series A Warrants issued in July 2014 financing		2,779,932		4.00	July 2019
(3) Series B Warrants issued in July 2014 financing		670,269		4.00	July 2019

Summary of Fair Value of Warrants Issued

The estimated fair value of warrants issued and classified as liabilities is reassessed at each reporting date using the Black-Scholes option pricing model.

	As of
	March 31,
October 2010 Warrant Valuation Assumptions	2015			2014
Risk-free interest rates		0.26	%		0.30	%
Expected dividend yield		0	%		0	%
Expected life	0.56 years			1.6 years
Expected volatility		49.87	%		41.00	%

	As of
	March 31,
Series A and Series B Warrant Valuation Assumptions	2015			2014
Risk-free interest rates		1.19	%		—
Expected dividend yield		0	%		—
Expected life	4.25 years				—
Expected volatility		63.35	%		—

- Definition

Tabular disclosure of warrants or rights issued. Warrants and rights outstanding are derivative securities that give the holder the right to purchase securities (usually equity) from the issuer at a specific price within a certain time frame. Warrants are often included in a new debt issue to entice investors by a higher return potential. The main difference between warrants and call options is that warrants are issued and guaranteed by the company, whereas options are exchange instruments and are not issued by the company. Also, the lifetime of a warrant is often measured in years, while the lifetime of a typical option is measured in months. Disclose the title of issue of securities called for by warrants and rights outstanding, the aggregate amount of securities called for by warrants and rights outstanding, the date from which the warrants or rights are exercisable, and the price at which the warrant or right is exercisable.

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